THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, September 11, 1995 TAG: 9509110037
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY FRANCIE LATOUR, STAFF WRITER
LENGTH: Short : 42 lines
New federal regulations mean that Chesapeake citizens and officials will have little choice but to build the improved filtering system.
The only question is how they go about borrowing the money - and the process will determine how much the plant eventually will cost.
On Nov. 7, citizens will be asked to approve a bond referendum to pay for the new treatment process. Approval of the bond could save the citizens more than $5 million, city officials said. Rejection is likely to cause another hike in water and sewer rates in January.
Budget Director Claude A. Wright said that, without the kind of ``full-faith'' collateral that a citywide mandate represents, Chesapeake would have to pay higher interest rates. That would raise the total cost of the project from $72 to $78 million, he said.
Wright compared the $5.5 million gap to the difference between a mortgage - which uses a home as collateral - and a loan based on an unsecured line of credit, like a credit card.
``When you're trying to borrow money to buy a house,'' Wright said, ``having actual property for collateral counts for more. . . The mortgage costs less in the end because there is less risk to the investor.''
On Aug. 23, Chesapeake City Council members raised water and sewer rates by $2.10 for the average household's bi-monthly bill.
That hike was based on voter approval of the referendum; the rates would have to go higher again in January if the bonds are voted down, city officials have said.
Borrowing up to $78 million for the plant is no small decision for a financially strapped city that is struggling to meet the demands of rapid growth.
Last year, the city owed about $193 million. Since then, the state's fastest-growing city has borrowed $147 million more in bonds. by CNB